Cryptocurrencies Taking Off in Indonesia: Regulatory Progress and the Digital Future

In recent years, Indonesia has seen a significant rise in crypto adoption. This is largely due to a substantial portion of the unbanked population, along with various educational initiatives from the public and private sectors. Across Southeast Asia, governments have generally taken a non-aggressive stance toward the crypto market. Many Indonesians are turning to projects like Bitcoin, Ethereum, and USDT for faster, cheaper remittances, greater financial independence, and protection against inflation. Given these trends, we’ve previously highlighted countries like the Philippines, Vietnam, and Thailand. Now, it’s time to focus on the world’s largest archipelago: Indonesia.

“If tax havens exist, it’s because of tax hells”, says Javier Milei, the current president of Argentina. This might sound like an exaggeration, but it’s not. People wouldn’t move their money elsewhere if taxes were reasonable or if they felt their contributions led to better public services. Why bring this up? Simple: data from January (2024) showed a significant drop in crypto tax revenue in Indonesia. Just over 467 billion Indonesian rupiahs were collected, roughly 29 million dollars at the time of writing. This marks a 62% decrease compared to 2022, mainly due to the double taxation on crypto in Indonesia.

In Indonesia, crypto transactions are subject to two tax rates: a 0.11% value-added tax (VAT) and a 0.1% income tax. Additionally, local exchanges incur a 0.02% fee. Many residents view these taxes as unfair.

In March, a key official from the Commodity Futures Trading Supervisory Agency (CoFTRA) –the country’s crypto regulator– urged the Ministry of Finance to reconsider the tax rates on digital assets. Investors are anticipating changes, as in 2025, the country’s largest financial services regulator, OJK, will assume oversight of all crypto-related matters.

“As crypto is set to become part of the financial sector in January 2025, we urge the Director General of Taxes to reconsider the tax rates. It’s been over a year since these rules were introduced, and tax rates are usually reviewed annually. I’ve previously mentioned that our crypto industry is still in its early stages, and imposing heavy taxes could hinder its growth”.

–Tirta Karma Sanjaya, CoFTRA’s Head of Market Development.

Indonesia’s Financial Services Authority (OJK) is working on creating a clear and straightforward regulatory framework for the crypto sector, which is expected to roll out in early 2025. Under this new framework, companies will need to get approval before testing new products, services, and business models in the country. Currently, cryptocurrencies are classified as commodities in Indonesia, but there is speculation that they might be reclassified as financial instruments once the OJK takes charge.

“Our focus is on consumer protection and education. We hope that our regulatory measures will effectively prevent fraudulent investments”.

–Hasan Fawzi, IDX Director.

In December 2023, Gibran Rakabuming Raka, the eldest son of Indonesian President Joko Widodo, was announced as the running mate for presidential candidate Prabowo Subianto in the upcoming elections. This is noteworthy because Gibran is a strong supporter of crypto and has promised to enhance training for professionals in blockchain, artificial intelligence (AI), and cybersecurity.

“In the future, we’ll focus on what we call ‘digital downstreaming’ to address current challenges. We’re training experts in blockchain, cybersecurity, and cryptography, and we also want our students to be skilled in Sharia banking and digital marketing. We’re equipping them with the essential skills they’ll need.”

–Gibran Rakabuming Raka, VP candidate for Indonesia.

Here are some key highlights about crypto adoption in Indonesia:

• In the latest Crypto Adoption Index from Chainalysis, Indonesia was ranked 7th.
• In February, crypto transactions in Indonesia reached 30 trillion Indonesian rupiahs, which is over 1.85 billion dollars.
• The Commodity Futures Trading Supervisory Agency (Bappebti) reported that Indonesia had 19 million crypto investors in February, up by 170,000 since January.

Looking ahead, Indonesia’s crypto landscape looks promising. With the regulatory shift to the Financial Services Authority (OJK) planned for 2025, a more tailored and transparent legal framework for the digital market is anticipated. This evolution could improve conditions for investors and businesses while enhancing consumer protection without stifling innovation.

Our series on crypto adoption across various countries:

1. Vietnam’s Crypto Revolution: Youth, Technology, and Opportunities.
2. Understanding Venezuela’s Crypto Adoption: Key Insights and Developments.
3. The Journey of Argentina Towards Crypto Adoption: Economy, Politics, and a Digital Future.
4. Philippines’ Crypto Journey: Between Regulation and Financial Freedom.

Subscribe to the Purse.io Newsletter to stay updated with our weekly content on blockchain, e-commerce, and cryptocurrencies. Also, follow us on social media for updates on Hamza.biz, the first Web3 Marketplace powered by the Loadpipe protocol and the LOAD token. Our solution aims to enhance e-commerce with low gas fees and trading freedom. Click here to explore our Hamza roadmap.